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It's been over three and half decades since the government began construction of the Babai Irrigation Project, one of the national pride projects, which has achieved only 65 percent of the physical progress so far. The development of the Babai Irrigation Project commenced in the fiscal year 1988/89 and the completion deadline has been set to FY 2025/26. Given the current pace of the construction, it is unlikely that the project would be completed in the next three and half years. The project has to complete 35.76 percent of the remaining work by that time to meet the construction deadline. However, project officials say that there is a challenge in completing the remaining work during that period. The physical progress of the project in mid-July was 62.23 percent. And, only 2.01 percent of additional physical progress has been achieved in the first six months of this fiscal year. The project officials admit this progress is not satisfactory. In order to complete the construction of the project within the specified deadline, physical progress should be made at the rate of 3 percent quarterly, 6 percent semi-annually and 12 percent annually. However, the report of the project has confirmed that work has not been done accordingly. Now, project officials say there is no option but to extend the deadline. Although the construction started in FY 1988/89, the funding was inadequate at the beginning. Later, in FY 2012/13, Babai Irrigation was given the status of a 'national pride project', and after this, a larger budget was allocated for the project. However, the construction of the project was again affected by the Covid-19 pandemic and the delay by the contractor. Ramakrishna Ghorasaini, Information Officer of the project, said that it is difficult to complete the construction within the stipulated timeframe. "While the construction of the project was going smoothly, the pandemic stalled the works for almost two years," he said, adding, "Last year, the contractors did not work citing the rise in the price of construction materials." The project was launched by the government with the aim of providing irrigation facilities to around 36,000 hectares of arable land in the Bardia district. The total cost of the project is estimated at Rs18.96bn, which will be invested by the government. So far, Rs11.63bn has been spent on the project. Initially, the estimated cost of the project was Rs2bn which has gone up with the delay in the construction with each passing year.

With the government struggling to strike a balance between income and expenditure, the federal budget is currently in deficit which is increasing every successive month. The statistics of the Financial Comptroller General Office (FCGO) show the federal budget is in deficit by Rs 153.61 billion till March 5. The government revenue till the first week of March stood at Rs 594.91 billion whereas expenditure has reached Rs 748.52 billion. With the government failing to collect enough revenue while expenditures, particularly the recurrent expenditure, are rising fast, the fiscal imbalance is growing alarmingly. According to FCGO, the fiscal deficit began by the end of Ashoj (mid-September to mid-October) with the government failing to collect revenue as per target while recurrent expenditure, especially continue to increase. The government has targeted to collect Rs 1,244.75 billion in revenue in the current fiscal year. However, even after almost eight months, only 44.58 percent of the target has been achieved. With fiscal deficit looming, the government on February 12, announced a cut in its annual budget by a whopping 13.59 percent, the largest cut in recent times, after realizing that it would not be able to raise the required resources from all the most sources—particularly revenue and foreign aid. The revised budgetary allocation now amounts to Rs 1,549.99 billion from the original size of Rs 1,793.83 billion. The government’s revenue collection suffered mainly due to the prolonged import restrictions on a number of products including vehicles, alcohol, and expensive mobiles as well as the provision of cash margin in imports. The restrictions were first imposed in April 2022 for the import of 10 types of products. The number of restricted products was later reduced gradually but the ban on vehicles, alcohols, and expensive mobile sets continued till mid-December last year when the embargo was eventually lifted. The Nepal Rastra Bank made it mandatory to deposit a cash margin of up to 100 percent for opening letters of credit for the import of a number of products which also hit import-based revenue. Import covers around 50 percent of Nepal’s total revenue, according to the Department of Customs. Though these measures were taken to address the external sector vulnerability amid the ballooning balance of payment deficit and depleting foreign exchange reserves, the restrictive steps created a new problem of shortfall of resources for the government. The shortfall in revenue was also aggravated by increased compulsory liability by the previous government led by Sher Bahadur Deuba by increasing salaries for public officials and increasing the beneficiaries of social security allowances. This prompted the government to take harsh measures of budget cuts. A reprioritization of projects which have not been implemented even after getting a resource guarantee from the finance ministry, surrender of the budget which cannot be spent in the current fiscal year, and abandoning any proposal that creates new liabilities are other austerity measures announced by the Finance Ministry.

The price of gold has dropped by Rs 300 per tola in the domestic market on Tuesday. According to the Federation of Nepal Gold and Silver Dealers’ Association, the yellow bullion is being traded at Rs 102, 500 per tola today. The yellow metal was traded at Rs 102, 800 per tola on Monday. Meanwhile, tejabi gold is being traded at Rs 102, 000 per tola. Similarly, the price of silver has dropped by Rs 10 and is being traded at Rs 1,265 per tola today.

Amid the precarious economic outlook of the country, growing fiscal imbalance, rising bank default cases, and threats to the banking sector, Prime Minister Pushpa Kamal Dahal on Sunday sat down with the representatives of the private sector for the first time after he took charge of the Singha Durbar. The Prime Minister, who is also overseeing the Finance Ministry, discussed the problems in the economy and banking sector with the private sector representatives and senior government officials at his office in Singha Durbar. During the interaction, Dahal discussed the issues related to bank interest rates, microfinance problems, concerns of the private sector, and the attempts to create financial disorder in the country. During the meeting, Dahal said that the government has taken recent incidents to cause financial disorder seriously and is taking initiatives to resolve the problems in the banking and financial sector. "The government is worried about the current situation," a government official who participated in the meeting quoted the prime minister. "After discussions with the stakeholders, the government will move quickly and take concrete decisions." "The government is serious about resolving the challenges of the economy. I am aware and aware of people's complaints in the field of banks and microfinance," said Dahal. Seeking suggestions from the private sector, he further said that a high-level commission may have to be formed to resolve the problems. However, Sunday's discussion ended without a concrete decision. The Prime Minister came late to the meeting by an hour. While the meeting was called for 12.30 pm, Dahal reached only at 1.30 pm. "As the Prime Minister has another program to attend, the meeting lasted for one hour only," said a businessperson who attended the meeting. According to him, the representatives of the private sector put forward their concerns. According to Rajendra Malla, President of Nepal Chamber of Commerce (NCC), the private sector demanded a reduction in the bank's interest rate. "We have requested the Prime Minister to reduce the interest rate and premium rate of banks," he said. During the interaction, Nepal Rastra Bank Governor Maha Prasad Adhikari briefed the latest situation of the country's economy. Adhikari reported that the economy is in recovery mode following improvement in the country's external sector. Shekhar Golchha, President of Federation of Nepalese Chambers of Commerce and Industries (FNCCI) touched on the issues of banks' higher interest rates as well as rising non-performing loans. Vishnu Kumar Agrawal, president of the Confederation of Nepalese Industries (CNI) demanded the early appointment of the finance minister. Agrawal was of the view that the new finance minister should be a technocrat who understands the economy well. Nepal Bankers' Association President Sunil KC drew the PM's attention to recent anti-bank agitation by a vested interest group.